Ultra S&P500 ProShares (SSO) 11/9/09 PriceWatch Alert Down To $31.45 Break Even

Posted: Monday, November 09, 2009 8:36 AM EDT
By: Market Intelligence Center Staff

Ultra S&P500 ProShares (PCX: SSO) ended the last trading session at $35.10. So far SSO has hit a 52-week low of $14.16 and 52-week high of $37.34. SSO has been showing support around 34.04 and resistance in the 35.80 range. Technical indicators are Bullish. SSO appears on the Investors Observer Select ETF and HOLDR list. For a hedged play on this stock, look at a Mar '10 35 covered call (SOJ CI) for a net debit in the $31.45 area. That is also the break even stock price for this trade. This covered call has a 131 day duration, provides 10.40% downside protection and an 11.29% assigned return rate for a 31.45% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the SSO Jan '11 19 Call (ZFO AS) and selling the Mar '10 35 call (SOJ CI) for a $13.25 debit. The trade has a 131 day life and would provide 8.12% downside protection and a 20.75% assigned return rate for a 58.00% annualized return rate (for comparison purposes only). [ABR-Seven Summits Research]